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101426

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RepublicofthePhilippines
SUPREMECOURT
Manila

SECONDDIVISION

G.R.No.101426May17,1993

PHILIPPINEAMERICANGENERALINSURANCECOMPANY,INC.,petitioner,
vs.
COURTOFAPPEALSandTRANSPACIFICTOWAGE,INC.,respondents.

LinsanganLawOfficeforpetitioner.

Misa,Castro&Associatesforprivaterespondent.

PADILLA,J.:

In this petition for review on certiorari, Philippine American General Insurance Company, Incorporated assails the
decision*oftheCourtofAppeals,dated31July1991,renderedinCAG.R.CV.No.21252,whichreversedandset
asidethedecisionoftheRegionalTrialCourtofManila,Branch161andenteredanewonedismissingthepetitioner's
complaintwhichsoughttocollectthesumofP1,511,210.00fromtheprivaterespondent.

Thefactsofthecase,asfoundbytheCourtofAppeals,2areasfollows:

On September 4, 1985 the Davao Union Marketing Corporation of Davao City shipped on board the
vesselM/V"CrazyHorse"operatedbytheTranspacificTowage,Inc.cargoconsistingof9,750sheets
ofunionbrandGIsheetswithadeclaredvalueofP1,086,750.00and86,860bagsofunionPozzolan
andunionPortlandCementwithadeclaredvalueofP4,300,000.00.Thecargowasconsignedtothe
BicolUnionCenterofPasacao,CamarinesSur,withacertainPedroOlivanasthe"NotifyParty."

ThecargowasinsuredbythePhilippineAmericanGeneralInsuranceCo.,Inc.,underMarineNoteNo.
023408covering86,000,ofUnionPozzolanandPOrtlandcementfortheamountofP3,440,000.00.

The vessel M/V "Crazy Horse" arrived on September 7, 1985 as scheduled as the port of Pasacao,
CamarinesSur.Uponarrivaltheshipmasternotifiedtheconsignee's"NotifyParty"thatthevesselwas
already (sic) to discharge the cargo. The discharging could not be affected immediately and
continuouslybecauseofcertainreasons.First,thebuoyswereinstalledonlyonSeptember11,1985
second, the dischrage permit was secured by the consignee only on September 13, 1985 third a
woodencatwalkhadtobeinstalledandextensionofthewharfhadtobemade,whichwascompleted
only on September 26, 1985 fourth, the discharging was not continuous because there were
intermittent rains and the stevedores supplied by the consignee did not work during the town fiesta.
(Emphasissuppliedours)

On October 16, 1985, a super typhoon code named "Saling" entered the Philippine area of
responsibilityandwasfeltintheeasterncoastofthecountryonOctober17,1985.Ithadastrengthof
240KPHandPasacaowasplacedunderStormSignalNo.3.Thedischargingofthecargohadtobe
suspendedat11:40A.M.onOctober17,1985duetotheheavydownpour,strongwinds,andturbulent
sea. To prevent damage to the cargo all hatches of the vessel were closed and secured. (Emphasis
suppliedours)

At the time the discharging of the cargo was suspended, a total of 59,625 bags of cement and 26
cratesofGIsheetshadalreadybeendischarged.

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Infurtherpreparationforthetyphoonthevesselwasloadedwith22tonsoffreshwaterand3,000liters
of fuel. The shipmaster ordered the vessel to be moved about 300 meters seaward in order that it
wouldnothitthecatwalkorthewoodenbridgeorthewharf,ortherocks.Thevesselwasreadyfor
anymaneuverthatmayhavetobemade.

Accordingtotheshipmasterwhowasplottingthetyphoon'spathinachart,theradiuswassowidethat
therewasnowaythetyphooncouldbeevaded.From8:00P.M.ofOctober17,1985to8:00P.M.of
October18,1985thetyphoonragedinthearea.Itwasatabout5:20A.M.ofOctober18,1985when
the shipmaster ordered the maneuvering of the vessel but it could not be steered on account of the
strongwindsandroughseas.Thevessel'slinessnapped,causinghertobedraggedagainsttherocks,
andtheanchorchainstoppergaveway.Thevesselsustainedholesintheengineroomandtherewas
apowerfailureinthevessel.Waterstartedtofilltheengineroomandatabout6:15A.M.theengine
brokedown.

Theshipmasterhadnochoicebuttoordertheshiptobeabandoned.Hetoldthecrewtosecurethe
vessel while he went to the Municipal Mayor of Pasacao to request for police assistance to prevent
pilferageofthevesselanditscargo.Hewas,however,unabletogetanyassistance.Whenhereturned
to the vessel he found that it was being continuously pounded by the strong sea waves against the
rocks.Thiscausedthevesseltobreakintotwo(2)partsandtosinkpartially.Theshipmasterreported
theincidenttothePhilippineCoastGuardbutinspitethepresenceofthree(3)coastguards,nothing
could be done about the pilferage done on the vessel and its cargo. Almost the whole barrio and
becausethereweresomanyofthemthecrewandtheguardswerehelplesstostopthepilferageand
looting.AsaresultoftheincidentthecargoofcementwasdamagedwhiletheGIsheetswerelooted
andnothingwasleftoftheundischargedpieces.

Thetotalnumberofcementbagsdamagedand/orlostwas26,424costingP1,056,960.00whilethere
were4,000piecesoftheGIsheetsunrecovered,thecostofwhichwasP454,250.00.

Because the cargo was insured by it the Philippine American General Insurance Co., Inc. paid the
shipper Davao Union Marketing Corporation the sum of P1,511,210.00. Thereafter, the said insurer
madedemandsupontheTranspacificTowage,Inc.forthepaymentofsaidamountassubrogeeofthe
insured,claimingthatthelossofthecargowasdirectlyandexclusivelybroughtaboutbythefaultand
negligenceoftheshipmasterandthecrewofM/V"CrazyHorse".Becausethelatterrefusedtopaythe
amount of P1,511,210.00 demanded, the Philippine American General Insurance Co., Inc. filed the
presentcomplaint.

Thelowercourtfoundthatalthoughtheimmediatecauseofthelossmayhavebeenduetoanactof
God, the defendant carrier had exposed the property to the accident. The court also found plaintiff
guilty of contributory negligence and mitigated the plaintiff's claim to threefourths (3/4) of its value.
Thusthelowercourt,initsDecision,orderedthedefendant:

1)TopayplaintiffthemitigatedamountofP1,133,408.00plus12%legalinterestperannumcomputed
fromthedateofthefilingofhereincomplaintonMay15,1986,untildulypaid

2)TopayP8,000.00asattorney'sfeesand

3)Topaycostsofsuit.

SOORDERED.

Initsnowassaileddecision,respondentCourtofAppealsreversedthedecisionofthetrialcourtandruledinstead
that private respondent, as a common carrier, is not responsible for the loss of the insured cargo involved in the
caseatbar,assaidlosswasduesolelytoafortituousevent.

Petitioner in the presentpetitioncontendsthatrespondentappellatecourterredin not holding private respondent

liableforthelossofthesaidinsuredcargo.

WeaffirmthedecisionoftheCourtofAppeals.

It is not disputed that private respondent is a common carrier as defined in Article 1732 of the Civil Code.3 The
followingfactsarealsonotcontested:(1)thatthecargocarryingvesselwaswreckedandpartiallysankon18October1985
due to typhoon "Saling" (2) that typhoon "Saling" was a fortuitous event and (3) that at the time said vessel sank, the
remaining undischarged cargo, consisting of 26,424 cement bags and 4,000 pieces of G.I. sheets, were still on board the
vessel.

However,theCourtnotesthefactthatasof17October1985,thetimewhenthePasacaoareawasplacedunder
stormsignalNo.3dueto"Saling",theunloadingofthecargofromthevesselwasstillunfinished,notwithstanding

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thelapseofforty(40)daysfromthetimethevesselarrivedinPasacaoon7September1985,orthelapseofthirty
four(34)daysfromthetimeactualdischargeofthecargocommencedson13September1985.

Intheopinionofthetrialcourt,thislapseofthirtyfour(34)dayswithprivaterespondentnothavingcompletedthe
unloadingofthegoods,istantamounttounreasonabledelay,whichdelayexposedtheunloadedcargotoaccident.
The trial court held private respondent liable for the loss of goods under Article 1740 of the Civil Code which
providesthatifthecommoncarriernegligentlyincursindelayintransportingthegoods,anaturaldisastershallnot
freethecarrierfromresponsibility.

Ontheotherhand,theappellatecourtruledoutanynegligencecommittedbyprivaterespondentandheldthatthe
delayinfullyunloadingthecargofromthevessel"wasoccasionedbycausesthatmaynotbeattributedsolelyto
humanfactors,amongwhichwerethenaturalconditionsoftheportwheretheM/V"CrazyHorse"haddocked,the
customsoftheplaceandtheweatherconditions.4

The appellate court in exempting private respondent from liability applied Article 1739 of the Civil Code which
providesasfollows:

Inorderthatthecommoncarriermaybeexemptedfromresponsibility,thenaturaldisastermusthave
been the proximate and only cause of the loss. However, the common carrier must exercise due
diligencetopreventorminimizelossbefore,duringandaftertheoccurrenceofflood,storm,orother
natural disaster in order that the common carrier may be exempted from liability for the loss,
destruction,ordeteriorationofthegoods.

The appellate court ruled that the los of cargo in the present case was due solely to typhoon "Saling" and that
privaterespondenthadshownthatithadobservedduediligencebefore,duringandaftertheoccurrenceof"Saling"
hence,itshouldnotbeliableunderArticle1739.

Consideringthedisputedfactthattherereallywasdelayincompletingtheunloadingofthegoodsfromthevessel,
theCourtbelievesthattherealissueatbarcentersontheapplicationofArticle1740oftheCivilCode.Inshort,the
principal question, in determining which of the parties in the present case should bear the loss of the goods, is
whetherthedelayinvolvedintheunloadingofthegoodsisdeemednegligentlyincurredin,soasnottofreeprivate
respondentfromliability,notwithstandingthefactthattheultimatecauseofthelossofthegoodswasthesinkingof
thevesselbroughtaboutbytyphoon"Saling."

Indeed, from the time the vessel arrived at port Pasacao on 7 September 1985 up to 17 October 1985 when the
Pasacao area was placed under storm signal No. 3 due to typhoon "Saling", forty (40) days had passed. Under
normalconditions,aperiodofforty(40)daysisundoubtedlymorethanenoughtimewithinwhichtheunloadingof
the cargo (given its nature) from the vessel could be completed. Hence, the question boils down further to which
partyshouldbefaultedforthisdelay.

Private respondent argues that its duty to unload ceased on 7 September 1985 when the shipmaster notified the
consignee's"NotifyParty"thatthevesselwasreadytodischargethecargo.Ontheotherhand,petitionercontends
thatthedutytounloadthecargofromthevesselcontinuedtoremainwithprivaterespondent.Respondentappellate
court,however,ruledthatthequestionastowhichpartyhadthetasktodischargethecargoisactuallyimmaterial
underthecircumstances,asthedelaycouldnotbeattributedtoanyoftheparties,buttoseveralcausessuchas
the natural conditions of the Pasacao port, the customs of the place and the weather conditions obtaining at the
time.Theappellatecourtmadethefollowingobservations:

xxxxxxxxx

To our mind whichever of the parties had the obligation to unload the cargo is not material. For,
analyzing the causes for the delay in such unloading, we find that such delay was not due to the
negligence of any party but was occasioned by causes that may not be attributed solely to human
factors,amongwhichwerethenaturalconditionsoftheportwheretheM/V"CrazyHorse"haddocked,
thecustomsoftheplace,andtheweatherconditions.

The wharf where the vessel had to dock was shallow and rocky, hence it had to drop anchor some
distance away in a private port. Buoys had to be constructed in order that the vessel may properly
moored.Afterthebuoyswereinstalledawoodenstagehadtobeconstructedsothatthestevedores
couldreachthevessel.Forthistheyneededafloatingcranewhichwasnotimmediatelyavailable.The
bargesthatweretoloadthecargofromthevesselcouldnotgonearthewharfbecauseoftheshallow
androckycondition.Acatwalkhadtobeinstalledbetweenthebargeandthewharf.Thisnecessitated
thedismantlingofthewoodenstagepreviouslyinstalled.

Apart from these preparations and constructions that had to be made, the weather was not
cooperative.Evenbeforethetyphoonstrucktherewereintermittentrains,hencetheunloadingwasnot
continuous.TheactualunloadingstartedonSeptember13,1985andcouldhavebeenfinishedin4or
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5daysbutbecauseoftherainsitwasdelayed.Anotherfactorthatcausedfurtherdelaywasthefact
that the fiesta of the Virgin of Penafrancia was celebrated and for the length of time that the
celebrationswereheld,thestevedoreswhowerefromtheplacerefusedtowork.

xxxxxxxxx

The Court of Appeals summarized the reasons which adversely affected the completion of the unloading of the
cargo from the time the vessel arrived at the Pasacao area on 7 September 1985, namely:first, the buoys were
installedonlyon11September1985second,theconsigneesecuredthedischargepermitonlyon13September
1985 third, a wooden catwalk had to be installed and the extension of the wharf had to be made, which was
completed only on 16 September 1985 fourth, there were intermittent rains and the stevedores supplied by the
consigneedidnotworkduringthetownfiestaoftheVirginofPenafrancia,hence,theunloadingwasnotcontinuous.

We respect the abovementioned factual findings of the appellate court as to the natural conditions of the port of
Pasacao were the vessel was docked, and several other factors which harshly affected the completion of the
dischargeofthecargo,asthesefindingsoffactaresubstantiallysupportedbyevidence.6

While it is true that there was indeed delay in discharging the cargo from the vessel, we agree with the Court of
Appeals that neither of the parties herein could be faulted for such delay, for the same (delay) was due not to
negligence, but to several factors earlier discussed. The cargo having been lost due to typhoon "Saling", and the
delayincurredinitsunloadingnotbeingduetonegligence,privaterespondentisexemptfromliabilityforthelossof
thecargo,pursuanttoArticle1740oftheCivilCode.

Therecordsalsoshowthatbefore,duringandaftertheoccurrenceoftyphoon"Saling",privaterespondentthrough
its shipmaster exercised due negligence to prevent or minimize the loss of the cargo, as shown by the following
facts:(1)at5:20a.m.of18October1985,astyphoon"Saling"continuedtobatterthePasacaoarea,theshipmaster
triedtomaneuvertheveselamidststrongwindsandroughseas(2)whenwaterstartedtoentertheengineroom
andlatertheenginebrokedown,theshipmasterorderedthsshiptobeabandoned,buthesoughtpoliceassistance
topreventpilferageofthevesselanditscargo(3)afterthevesselbrokeintotwo(2)partsandsankpartially,the
shipmasterreportedtheincidenttothePhilippineCoastGuard,butunfortunately,despitethepresenceofthree(3)
coastguards,nothingcouldbedonetostopthepilferageasalmosttheentirebarriofolkcametolootthevesseland
itscargo,includingtheG.I.sheets.

Thediligenncedexercisedbytheshipmasterfurthersupportstheexemptionofprivaterespondentfromliabilityfor
thelossofthecargo,inaccordancewithArticle1739oftheCivilCode.

Althoughwefindprivaterespondentfreefromliabilityforthelossofthecargo,wedisagreewithitscontentionthat
the doctrine of res judicata applies in the case at bar, because the Board of Marine Inquiry rendered a decision
dated11April1988(actingonthemarineprotestfiledon19October1985bytheshipmasterofM/V"CrazyHorse")
holdingthatsaidshipmasterwasnotguiltyof"negligenceastheproximatecauseofthegroundingandsubsequent
wreckageofM/S"CrazyHorse",hence,recommendingthatthecaptain,hisofficersandcrewbeabsolvedfromany
administrativeliabilityarisingoutofthesubjectincident."7

The resolution of the present case is not barred by the judgment of the Board of Marine Inquiry. One of the
requisitesoftheprincipleofresjudicataisthattheremustbe,amongotherthings,identityofsubjectmattersand
causesofactionbetweenafirstandsecondcaseinorderthatthejudgmentinthepriorcasemaybarthatinthe
subsequentcase.8

Thecauseofactioninthemarineprotestwastoenforcetheadministrativeliabilityoftheshipmaster/captainofM/V
"Crazy Horse", its officers and crew for the wreckage and sinking of the subject vessel. On the other hand, the
causeofactionatbaristoenforcethecivilliabilityofprivaterespondent,acommoncarrier,foritsfailuretounload
thesubjectcargowithinaperiodoftimeconsideredunreasonablylongbythepetitioner.Whileitmaybetruethat
theCourtisboundtoaccordgreatweighttofactualfindingsoftheBoard,9weholdthattheprotestfiledbeforeitand
thepresentcaseassertdifferentcausesofactionandseekdifferentreliefs.

Alltold,wefindprivaterespondentnotlegallyliableforthelossoftheinsuredcargoinvolvedinthepresentcase.

WHEREFORE, the petition is DENIED. The appealed decision of the Court of Appeals, dated 31 July 1991,
renderedinCAG.R.CVNo.21252,isherebyAFFIRMED.

SOORDERED.

Narvasa,C.J.,RegaladoandNocon,JJ.,concur.

#Footnotes
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*PennedbyMme.JusticeSalomeA.MontoyawiththeconcurrenceofJusticesEduardoR.Bengzon
andCelsoL.Magsino.

1Rollo,p.4.

2Ibid,pp.4951.

3Art.1732.Commoncarriersarepersons,corporations,firmsorassociationsengagedinthebusiness
ofcarryingortransportingpassengersorgoodsorboth,byland,water,orair,forcompensation,
offeringtheirservicestothepublic.

4Ibid,p.53.

5Rollo,pp.5354.

6Republicvs.IntermediateAppellateCourt,G.R.No.70594,10October1986,144SCRA705.

7Rollo,p.142.

8Delfinvs.Inciong,G.R.No.50661,10December1990,192SCRA151.

9Vasquezvs.CourtofAppeals,G.R.No.42926,September13,1985,138SCRA553.

TheLawphilProjectArellanoLawFoundation

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